Supplemental environmental projects (SEPs) have received a growing amount of attention in recent years, from the Donald Trump Administration banning their use in settlements, to regulation and guidance from the Joseph Biden Administration reversing the ban, to legislative proposals prohibiting them altogether. This Article examines SEPs’ legality under existing law, focusing on claims that they violate the Miscellaneous Receipts Act and the Antideficiency Act. It begins with a brief history of SEPs’ policy evolution and the limitations on the U.S. Environmental Protection Agency’s and U.S. Department of Justice’s (DOJ’s) settlement discretion. It then examines claims that SEPs are unlawful, focusing on arguments made in a 2020 DOJ policy memo. It concludes that the 2020 analysis is flawed, masking policy preferences under the guise of statutory interpretation; and that opponents’ arguments ignore long-standing legal distinctions between payments negotiated in settlements and penalties assigned by a judge following a finding of liability.